HP Goes Radio Silent Into 2013 on Autonomy Debacle
Since disclosing its Autonomy-related writedown, HP's Thursday filing shows the company now faces ten separate shareholder lawsuits, including one from the City of Birmingham Retirement & Relief System .
In the wake of HP's writedown and fraud accusation, some in the media noted HP may have simply overpaid for the software and data analytics specialist.
Others such as Oracle (ORCL) highlighted that Autonomy had been shopped to them, but that HP's initial $11.7 billion pricetag was "way too high" . Notably, Oracle said the company's head of M&A, Douglas Kehring and its president Mark Hurd - a former HP chief executive - valued Automony at less than its $6 billion market value at the time.
Meanwhile, former Autonomy chief executive and founder Mike Lynch took to airwaves to mount a vigorous defense of the company's accounting. In an open letter to HP's board of directors, Lynch wrote, "It was shocking that HP put non-specific but highly damaging allegations into the public domain without prior notification or contact with me, as former CEO of Autonomy. I utterly reject all allegations of impropriety."
Lynch's criticism caused HP to quickly fire back with a second statement related to November fraud allegations levied against Autonomy.
"While Dr. Lynch is eager for a debate, we believe the legal process is the correct method in which to bring out the facts and take action on behalf of our shareholders. In that setting, we look forward to hearing Dr. Lynch and other former Autonomy employees answer questions under penalty of perjury," HP said, while noting that it will defer investigation to regulators like the DoJ and file its own legal action at "the appropriate time."
After HP's Dec. 27 10-K filing with the Securities and Exchange Commission , investors now know legal authorities will be investigating HP's claim of an accounting fraud perpetrated by Autonomy.
"On November 21, 2012, representatives of the U.S. Department of Justice advised HP that they had opened an investigation relating to Autonomy," HP said in its filing, which added that the company has "provided information" to the U.K.'s SFO and the SEC. "HP is cooperating with the three investigating agencies," the company adds.
While the DoJ's investigation signals investors will see a resolution to HP's multi-year debacle, that regulatory investigation may also prove to be a distraction in 2013 for HP and its CEO Whitman, as the company tries to execute on a make-or-break turnaround effort.
"It is extremely disappointing that HP has again failed to provide a detailed calculation of its $5 billion write down of Autonomy, or publish any explanation of the serious allegations it has made against the former management team, in its annual report filing today," wrote Lynch, in a Thursday statement.